LONDON, Aug 22 (Reuters) - European shares fell on Friday
after a brisk two-week rally, hurt by a ratcheting-up of
tensions in Ukraine, although traders said a dovish tone in a
speech by U.S. Federal Reserve Chair Janet Yellen limited
losses.

Souring the mood, Ukraine declared that Russia had launched
a "direct invasion" of its territory after Moscow sent a convoy
of aid trucks across the border into eastern Ukraine where
pro-Russian rebels are fighting government forces.

But the FTSEurofirst, which fell as much as 0.7
percent in a choppy day of trade, managed to recover some of its
poise to end the session down 0.3 percent at 1,351.38 points.

In a defence of her policy approach, Yellen, at a central
banking conference in Jackson Hole, Wyoming, said that U.S. job
markets remain hampered by the effects of the Great Recession
and the Fed should move cautiously in determining when interest
rates should rise.

It was these comments that were behind a brief spike by the
market into positive territory, traders said.

"Yellen's speech showed she's still unsure about some of the
data we're getting, and as a result she could hold off from
raising rates," Central Markets trading analyst Joe Neighbour
said.

Despite Friday's overall weakness, the FTSEurofirst recorded
its biggest weekly gain in six months - up 2.1 percent.

The index has risen more than 4 percent since a low hit two
weeks ago, regaining ground following a sell-off triggered in
June by the worries over the crisis in Ukraine.

But even after the sharp two-week rally, the index is still
down more than 3 percent from the 5-1/2 year high hit in June.

The euro zone's blue-chip Euro STOXX 50 index
was down 0.8 percent at 3,098.50 points. In the first minutes of
trading, the index tested a key resistance level representing
its 200-day moving average, before falling back.